Senior and Post-Acute Healthcare News and Topics

Healthcare Polar Express

With the Holidays fast approaching and me, heading into a break and a brief vacation, the time is right to recap the current health policy landscape. As the title states, now it seems as if the industry is riding on the Healthcare Polar Express; head first into the dark, cold, snowy north.

Fiscal Cliff: Wow, what a mess. The House has adjourned for the Christmas holiday, leaving the Senate to try to fashion a compromise bill. The key players, namely Speaker Boehner and President Obama are at impasse. As I write, the market has dropped by 120 points. Aside from the tax issues unresolved, the bigger implications of “no deal” are the pending Medicare Part B cuts of 26% (physician payments, outpatient payments tied to the Sustainable Growth Rate formula), sequestration cuts for Medicare of 2%, and a series of PPACA related provisions that raise Medicare premiums and apply new provider taxes on insurance companies/insurance plans. While it is possible that a temporary deal gets one, buying once again a brief reprieve, the tone of settlement of the big issues is alarming. What’s worse is the imbedded economic impact of “no deal” or a “marginalized” deal. Recall, Medicare and Medicaid funding is primarily tied to taxes; payroll and income. I am most alarmed at the implication for Medicaid as any further erosion in economic recovery will put states in a real fiscal vice. Nationalized signs of recovery are just that, nationalized. Important for state budgets and Medicaid is an expansion of GDP growth fertile enough to expand into local, regional and state economies. Right now, a meager 2% GDP growth is akin to treading water for most states. Slower growth or a recession is disastrous as Medicaid ranks are already swollen with chronically unemployed and underemployed individuals.

Medicare and SNFs: On the heels of last year’s outlay reduction and rate cuts (10%), sequestration cuts set to occur without a Fiscal Cliff compromise add an additional 2% reduction. Making matters worse are two recently released reports from Medpac and the GAO respectively. In November, the GAO reported that 23% of all Medicare SNF claims are fraudulent (upcoding, care billed for and not provided, etc.). Important to note, the GAO review focused on claims from 2009, prior to changes imputed under RUGs IV. Arguably, the current environment is still somewhat ripe with fraudulent claims but my guess is that the GAO is mixing “apples with oranges” in some of its conclusions. The simple fact is that the RUGs III environment and rules gave providers very wide berth via the use of look back provisions, the methodology for minute counting (group minutes divided in whole treatments versus fractional), etc. Earlier in the month, Medpac recommended elimination of the 2013 market basket for SNFs accompanied by a plan to rebase rates for 2014 imbedding an initial 4% payment reduction. Medpac’s conclusion is derived somewhat from data drawn from the GAO but moreover, from reviews of cost reports, etc. that continue to imply fairly substantial Medicare margins for SNFs. Medpac’s reasoning for rebasing is to bring payments more in-line with provider costs (down). The difficulty in making sense of this argument for the industry is that the industry still survives by cost and revenue shifting as the dominant payer source for the vast majority of SNFs is Medicaid; historically a payer that creates a negative margin. Regardless of the track Congress takes, the overall implication is a future with downward rate trend. The industry faces difficult haggling positions given the GAO’s report – tough to argue that rates should remain high when there is a 20 plus percent fraud over-hang.

Lame Duck Watch: If the Fiscal Cliff issues aren’t enough to feel like “coal in the stocking”, consider that this is also Lame Duck time in the House and the Senate. Lame Duck watch means simply this: Don’t ignore the series of bills and riders to spending continuation legislation proffered by Lame Duck Senators and Congressmen. A classic case is a bill supported by Lame Duck Senator Kohl known as the Painkiller Bill. Kohl first introduced this bill in 2011 and it went nowhere. Its back. The bill on the surface seems reasonable, offering an easier methodology for physicians to provide oral orders for opiates and other pain killers for SNF residents. The objective is to provide more rapid response to patients with chronic and break-through pain. Alas, as is customary with legislative manipulation of this sort, the bill is loaded with potholes that would dramatically increase record-keeping requirements for pain medication administration and impart fines (significant) and penalties including prison time for compliance failure or diversion. Simply put, this should be a non-starter. The issue isn’t to create a different path but to establish a different systemic methodology that would allow the use and encourage with grant funding, automated dispensing. Hospitals have used this system for years but as of today, CMS still requires “unit dose” per resident for SNF patients. With automated dispensing, the delay in care issues are significantly controlled as is the likelihood of diversion as the systems have multiple fail-safes for access and distribution of controlled substances such as opiates.

Hospital Quality Payment Program: On Thursday, CMS released a schedule of bonuses and penalties for 3,000 hospitals tied to quality of care provided by standard as well as patient experience. The nearly $1 billion in payment revisions will begin in January. The approach or program is known as Value Based Purchasing, incorporating 12 measures of timely and effective clinical care. Examples include the percentage of heart attack patients given anti-coagulants within 30 minutes of arrival at the hospital, the percent of pneumonia patients cultured before started on anti-biotic therapy, and the percent of surgical patients that received an antibiotic within an hour of surgery. In addition, 8 surveyed measures on quality of service were incorporated. Examples include how well doctors communicated with patients, how well nurses communicated with patients and how responsive hospital staff was to patient needs. Any reader interested in knowing all 12 clinical measures and the 8 quality of service measures, drop me an e-mail (contact on the Author page) or comment to this post. I also have information on possible upcoming additions to the program as well as a series of charts and accompanying data on hospital performance. Nationally, 52% of hospitals will receive positive adjustments and 48% negative or payment reductions. The best performing state in terms of percentage of hospitals receiving a bonus is Maine (79%) with an average adjustment of .23%. The worst performing state, if you can call it that, was Washington D.C. with 0 or no hospitals receiving a bonus.

To all my readers, Happy Holidays and best wishes for a prosperous, healthy and safe New Year!

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A Blog about post-acute, senior healthcare and general healthcare issues, federal and state policy and industry specific information. The Blog is in categories and I will try to keep it fresh and current and topic driven. Anyone with a topic question or a subject of interest, let me know as my research in health care and in senior health related issues is extensive.